When an injury occurs in the workplace, the affected employee is entitled to receive benefits under a workers' compensation (WC) insurance policy that has been obtained by the employer. Among the benefits available under WC policies is compensation for lost wages for periods during which the employee is absent from work due to the injury. For some workers, short or long term disability coverage may be available to partially replace lost wages, in cases where the disability did not result from an injury on the job. Usually an employee does not receive salary or wages from the employer while the employee is receiving WC or disability benefits.
Workers' compensation insurance and disability coverage provide benefits to employees, but do not reimburse employers for increased costs or other losses that may accrue to the employer due to an employee's absence from work. (Typically a WC policy provides benefits only to injured employees and does not provide any benefit payments to an employer.) For example, while an employee is absent, the employer may need to pay overtime compensation to other employees who take over tasks that would otherwise have been performed by the absent employee. Also, the employer may incur expenses related to hiring of a temporary or permanent replacement for the injured employee. Under some circumstances, it may not be feasible to replace the employee for a period of time, and the absence of the employee may prevent the employer from realizing revenue that would have been obtained if the employee had not been absent. Moreover, even in cases where a temporary or permanent replacement is hired, or fellow employees work extended hours to cover for the absent employee, some revenue opportunities may be lost.